Andre Preneur supervises two consulting jobs in the consulting firm of Dewey, Ch
ID: 2373625 • Letter: A
Question
Andre Preneur supervises two consulting jobs in the consulting firm of Dewey, Cheatham, and Howe, which does studies on environmental cleanup. One of the consulting jobs is for the Canadian government the other is for General Electric, Inc. After receiving the monthly financial reports on the two jobs, he immediately called his boss to report that costs were way over budget on the General Electric job. %u2018%u2018The job is only about three-fourths complete, but we%u2019ve spent all the money that we had budgeted for the entire job,%u2019%u2019 he said. %u2018%u2018You%u2019d better watch these job costs more carefully in the future,%u2019%u2019 his boss advised. %u2018%u2018Meanwhile, charge the rest of the costs needed to complete the General Electric job to your Canadian government job. We%u2019re under budget on that job, plus we get reimbursed for costs on the government job.%u2019%u2019
a. What should Andre do?
b. Does it matter that Andre%u2019s consulting firm is reimbursed for costs on the Canadian government job? Explain.
Explanation / Answer
a. Andre should continue to record the costs for the General Electric job in the General Electric account. He should explain to his boss that this would help them to better budget similar jobs in the future. It would allow them to find the problems by calculating variances for each specific job. By charging it to the Canadian government job like the boss said, the costs would be mixed and wouldn't give management the information they need to budget the costs better in the future. Also, it would be unethical for them to charge the Canadian government for the costs of another job.
b. The fact that they are reimbursed for the costs on the Canadian government job probably influenced the advice from the boss to charge the expenses to that account. However, it would be unethical to charge them for the costs of another job. Therefore, if they were going to do the right thing after charging it to the Canadian government job, they would need to recalculate the costs for each. In the end, this would take more time and effort.